Judge suggests Rineharts sell Hope Downs to end family split

The NSW Supreme Court has heard that the Tax Office has asked to access the files in the bitter dispute betwen Gina Rinehart (centre) and her two eldest children over control of the family trust.
Photo: Andrew Meares

The Australian Taxation Office wants access to sensitive court documents in the bitter dispute between
Gina ­Rinehart
and her two eldest children over a $5 billion family trust.

NSW Supreme Court judge Paul Brereton told lawyers for Mrs Rinehart, Australia’s richest person, her flagship company
Hancock Prospecting
and her four children, that the tax office had asked for access to the court file. It also emerged that the tax office asked for access to documents more than a year ago and was denied them at the time by the judge.

The reason for the ATO request was not made public, but is likely to relate to a potential capital gains liability on which the case centres, that could cost Mrs Rinehart’s children hundreds of millions of dollars.

The trust holds 23.4 per cent in Hancock Prospecting and the company has entered into a lucrative joint-venture agreement with mining giant
Rio Tinto
to develop the Hope Downs mine in Western Australia’s Pilbara region.

Justice Brereton said the court could force Hancock Prospecting to sell the Hope Downs mine to Rio Tinto at ­market value to resolve the family dispute with certainty.

The family factions cannot agree about who should be appointed replacement trustee, and the agreement with Rio says only a lineal descendent can be appointed – or ­Hancock’s stake in the mine could be at risk. The judge said the profits from the sale could be used to pay any capital gains tax.

“It is not beyond the scope of possibility that either proposal [by the beneficiaries to appoint new trustees] is any more attractive than resolving it ­forever by winding it up," he said.

The barrister representing Mrs Rinehart’s youngest daughter,
Ginia Rinehart
, said she opposed the plan. “My client is 27 and she would prefer to see the asset remain in the company and be developed," Richard McHugh, SC, said.

Related Quotes

Company Profile

Ginia Rinehart has proposed that Mrs Rinehart’s children all hold shares in a company managed by an independent trustee.

Under the original trust agreement, Hancock Prospecting shares have to be held by a lineal descendent of Mrs Rinehart, or a spouse of one of her children, otherwise a clause is triggered that allows Rio Tinto to buy Hancock Prospecting out of the venture. This has further complicated the situation faced by the court, which is trying to determine should be the new trustee.

Justice Brereton said he would not allow
Sasha Serebryakov
, the husband of one of Mrs Rinehart’s other daughters,
Bianca Rinehart
, to become a ­trustee of the trust. The case will return to court next week.

Mrs Rinehart wrote to her children and told them they would be bankrupted due to capital gains liability if the trust were able to vest.

John Hancock
and Bianca Rinehart sued their mother after receiving the letter on the basis that she had breached her duty as trustee and was not acting in their best interests.